Financial services
Don't be swayed by the sales pitch, read TheSite's foolproof guide to financial services.
Financial services companies like banks and investment houses are sneaky. They know that buying financial products isn't the same as buying a car or a games console: you can't actually see something physical. That means it's easier to fool you. So here's a quick list of ways to save money and protect yourself.
- Get a good rate of interest from your bank. Did you know that some current accounts pay up to 30 times more interest than others? If you're going to keep much money in the bank, shop around for a good rate. Check out Moneyextra to compare different accounts online.
- Get a low rate of interest when you borrow. In the same way, some banks and credit cards charge ten times more than others for borrowing. You wouldn't buy a car for ten times its market value, would you? Yet millions of Britons are paying over the odds to borrow money. Again, shop around, and always ask for the APR, it's the easiest way to compare rates.
- Talk to your bank manager. If you've got money worries, don't hide your bills. Banks charge a fortune for letters telling you what you already knew! Instead talk to your bank manager. It's his job to look after you, and to help you resolve your worries. You'll save money in the long run.
- Get a financial adviser. Your initial financial consultation should be free, and whilst an adviser makes money from commissions on the products you buy, there are thousands of products only available through an adviser; and many of them will give you a better rate. Look for the blue "IFA" logo- it's a guarantee of independent impartial advice.
- Saving tax is the same as saving money. Look for ISAs and other savings products which are tax-effective as well as offering good interest. Money which doesn't go to the taxman goes to you!
- Beware special offers. Always look at the overall cost of buying a product. For example, mortgages often have a very low rate for the first six months - but that's no use if a whopping rate is charged for the rest of the term. Be sure to read the small print. Some mortgages require you to take out insurance policies with the same company at a high fee. Similarly, with car insurance, a cheap policy may not offer such good cover (e.g. can you drive abroad, or drive another person's car?). Small print is small because they don't want you to bother reading it. Protect yourself and get a good deal - put in the effort to read.
- Learn to complain. If you think you've been treated unfairly, complain. There are many high profile success stories where individuals have successfully retrieved their money (or some of it) where a financial company has been in the wrong. There's an ombudsman for most types of financial product, and the Financial Services Authority (www.fsa.gov.uk/) or General Insurance Standards Council (www.gisc.co.uk) can often help.
- Beware pressure sales. This is true in two situations. First, if anyone insists on coming to your house, run a mile. Second, if you feel pressured in a bank or estate agency meeting, ask to leave and return later. It's a classic trick of estate agents especially to try to sell you a mortgage at the same time as you look at a house. If you feel off guard, leave. It's your right.
- Get the paperwork. Whatever you're buying, ask for written, signed confirmation of all possible charges, including charges if for example, you miss a payment. Also ask if there is a "cooling off period" - with most insurance for example there is.
- Consider "open" banking. This is a relatively new type of account where you can offset interest on your current account against borrowing, like a mortgage. This can save you money because the company concerned is lucky to have both your saving and borrowing business.
Finally, above all, don't forget that you're the customer. Financial companies do very well out of you, and like to make you feel small. It's your right to know everything about a product, and it's your right to shop around.
